Topic: Energy and Environment

Renewable Energy BS at U.S. News & World Report

In an article posted the other day at U.S. News & World Report, Marianne Lavelle reports on the state of affairs in the renewable energy industry. While the story she tells is a good one, she makes two stunning errors that lead me to question every other figure reported in the article.

Error #1 -

Historically, ethanol has been more expensive than gasoline, but crude oil prices are now so high that ethanol would be cheaper even without its 51-cent-per-gallon subsidy. Indeed, one reason pump prices have not skyrocketed along with the price of crude oil is that so much fuel is blended with 10 percent ethanol.

Really? Ethanol (E100) prices on U.S. spot markets last week averaged $1.87 a gallon. That is indeed cheaper than the price of conventional gasoline in those same markets ($2.25 per gallon), but ethanol has only two-thirds of the energy content of gasoline. If you want to buy enough ethanol to displace the energy you get from a gallon of gasoline, you would have to spend $2.80 per gallon. Hence, ethanol is not cheaper than gasoline, and federal mandates to use ethanol in transportation fuel does not reduce pump prices.

Error #2 -

The plug-in advocacy group CalCars estimates that with today’s electricity prices, drivers would be paying the equivalent of 75 cents per gallon [were they to run their cars on electricity rather than gasoline].

Again, really? Electricity prices last week averaged 9.57 cents per kilowatt hour. Given that there are 3,400 BTUs in a kilowatt hour of electricity and about 124,000 BTUs in a gallon of gasoline, simple math dictates that it would cost almost $3.50 to buy enough electricity to get the same amount of energy we get from a gallon of gasoline.

Reporters have got to stop taking figures at face value from policy activists with political axes to grind. And editors have got to start asking reporters to independently back their numbers up. Until that happens, don’t bother with the print media. The “facts” bandied about therein are a crap shoot. Some are correct, some are not, but you never know which.

Heck of a Job, Smokey!

A couple of weeks ago, the Secretary of Agriculture proudly gave the Chief of the Forest Service an award for “exemplary leadership and accomplishment in reducing the risk of catastrophic fire to both the wildland and Wildland Urban Interface areas through the U.S. Forest Service Hazardous Fuels Program supporting the President’s Healthy Forests Initiative.”

This award would be ironic even if fires in California had not burned hundreds of homes and hundreds of thousands of acres this week. Prior to the southern California inferno, wildland fires had already burned well over 1,800 structures and more than 8 million acres in 2007.

In fact, President Bush’s signing of the Healthy Forests Act in 2003 seemed to signal a huge increase in fires. In the decades prior to 2003, an average of about 4 million acres burned each year and only one year had topped 8 million. Since then, the number of acres burned has never been less than 8 million.

The real problem is too much money: Congress has given the Forest Service a virtual blank check for fire suppression. The agency – perhaps subconsciously realizing that it needs a sustained number of homes burned each year to keep Congress’ interest in giving it money – has not adopted policies aimed at cost-effectively protecting homes. Instead, it merely promises that it will save homes through fire suppression – a promise that it cannot keep.

The result is that homeowners – expecting that the Forest Service will apply massive resources to save their homes – do not make the efforts needed to protect their structures from fires. Those efforts are not very much: mainly applying a nonflammable roof and keeping flammable vegetation to a minimum within 100 to 150 feet of their homes. Those efforts are really all that is needed. In fact, some housing developments have been treated to be so safe from fire that residents are advised to stay in their homes during a fire rather than to evacuate.

For a thorough analysis of Forest Service fire policy, read my Cato policy paper, The Perfect Firestorm. For a review of the recent fires, see my Antiplanner blog.

Is Portland Light Rail a Success?

My recent Cato policy analysis, Debunking Portland, said Portland’s light rail is a failure. Paul Weyrich, the noted conservative and president of the Free Congress Foundation, responds that it is successful.

The question becomes, “How do you define success?” Weyrich claims that Portland’s light rail led to billions of dollars in economic development. But my paper shows that that development received billions of dollars in subsidies – and before the city started offering subsidies, not a single transit-oriented development was built along the light-rail line.

“Many (Portlanders) use their public transportation system,” says Weyrich. In fact, 9.8 percent of Portland-area commuters took transit to work before the region build light rail. Today it is just 7.6 percent. In a story repeated in numerous cities that have built rail lines, rail cost overruns forced the city to raise bus fares and reduce bus service. That’s a success?

To Weyrich, rail is successful if anyone at all rides it. My standard is somewhat higher. For a point-by-point response to Weyrich’s article, see my Antiplanner blog.

Globalization and Food Safety

The Washington Post has an interesting story today about E. coli on lettuce. A batch of lettuce produced in California last month passed through numerous screenings and was sent to U.S. grocery stores. Some of it was also sent to Canada, and the government there found E. coli, which led to a major recall across both countries.

Here are some speculations:

  • Globalization increases the safety of American-produced goods because those goods must often pass muster in foreign markets where consumers and governments have different standards and safety procedures.
     
  • I don’t know whether American or Canadian food safety procedures are better, but a diversity of systems generates greater information, which allows producers and governments everywhere to improve quality.
     
  • Globalization doesn’t lead to a “race to the bottom” on environmental standards as critics often claim. Some countries, such as Japan, apparently have very high standards on food, and that tends to push up standards elsewhere. When Japanese importers demand strict standards from Chinese food producers, Americans consuming Chinese products also benefit.

Lomborg on Gore

At the Guardian’s “Comment is free” site, skeptical environmentalist Bjorn Lomborg has some tart words for the Nobel committee:

This year’s Nobel Peace Prize justly rewards the thousands of scientists of the United Nations Climate Change Panel (the IPCC). These scientists are engaged in excellent, painstaking work that establishes exactly what the world should expect from climate change.

The other award winner, former US vice president Al Gore, has spent much more time telling us what to fear. While the IPCC’s estimates and conclusions are grounded in careful study, Gore doesn’t seem to be similarly restrained.

Gore told the world in his Academy Award-winning movie (recently labelled “one-sided” and containing “scientific errors” by a British judge) to expect 20-foot sea-level rises over this century. But his Nobel co-winners, the IPCC, conclude that sea levels will rise between only a half-foot and two feet over this century, with their best expectation being about one foot - similar to what the world experienced over the past 150 years. …

The IPCC engages in meticulous research where facts rule over everything else. Gore has a very different approach.

Debunking Coercion

The Congress for the New Urbanism has responded to my July policy analysis, Debunking Portland, with a paper titled, Debunking Cato. I am posting my reply on the Antiplanner blog.

New Urbanism refers to a recent architectural fad that includes mixed-use developments (retail and housing in the same complex), high-density housing (either multi-family or single-family on tiny lots), and pedestrian-friendly design (limited parking and storefronts on sidewalks instead of facing large parking lots). There is a demand for this type of development and no one objects to developers meeting that demand.

Portland, however, has decided to go far beyond market demand by imposing this type of development on many people. An urban-growth boundary has driven up the cost of single-family housing and the city uses subsidies, including tax-increment financing and below-market land sales, to promote high-density housing. A member of the Portland city council (and leading candidate for mayor) has even said that no new housing should be built in Portland that does not meet New Urban densities and designs.

My paper shows that Portland has achieved very little from this massive and cost coercion. The Congress for the New Urbanism basically argues that it has achieved slightly more than my paper says. But those benefits are still so tiny that they are overwhelmed by the costs to homebuyers, commuters, and taxpayers in the region.

Some people in the Congress for the New Urbanism say they merely want to build for the market and do not support coercive policies. Lovers of freedom can support New Urbanist efforts to dismantle obsolete zoning codes that prevent developers from meeting market demand for New Urban designs.

By the same token, I note in my reply, New Urbanists who oppose coercion cannot defend Portland’s policies, which are based almost entirely on coercive land-use regulations, taxation, and subsidies. Those policies don’t produce the benefits claimed for them and they do impose huge costs on the cities that apply them.

Senate Now Debating the Manner in Which to Fleece You

After a disastrous result in the House of Representatives, the farm bill debate has moved on to the Senate, where the main conflict is about how to provide assistance to farmers. Senator Max Baucus (D, MT), who sits on the Agriculture Committe but also holds the purse strings as Chairman of the Senate Finance Committee, favors a permanent weather-related disaster relief fund alongside more “traditional” farm subsidies. The Chairman of the Senate Agriculture Committee, Tom Harkin (D, IA) prefers government subsidies based on farm revenue rather than commodity prices, and more spending on “renewable fuels” and conservation of farmlands.

Sen. Harkin wants about $10 billion dollars over the amount currently slated for farm programs to pay for his pet projects, but Sen. Baucus has made it clear that if Sen. Harkin wants more money, then he has to dance somewhat to Mr. Baucus’ tune. Sen. Harkin has in recent days appeared more open to a “modest” permanent disaster-assistance program if it means he gets his money (see here). Something tells me that Sen. Harkin’s definition of “modest” might be different to mine. Nor am I convinced that a permanent disaster relief trust fund would prevent Congress from approving extra disaster funds along the way.

The administration has issued a veto threat, but on ominous grounds. For example, the administration does not like the tax package that the House approved to pay for extra money for food stamps and sees the House income cap of $1 million dollars annual adjusted gross income as an insufficiently tight means test. As well they might, because it would affect only 7,000 farmers.

The veto threat is ominous because (a) it is based on things that are minimal and easily fixed relative to the entire package itself and (b) President Bush passed the similar 2002 farm bill without too much wailing and gnashing of teeth. At no point has the administration seriously questioned the rationale for these programs. While the President may have little to lose this time by vetoing the thing, Secretary of Agriculture Mike Johanns is reportedly seeking the Senate seat vacated by Sen. Chuck Hagel in Nebraska in 2008. Secretary Johanns has pushed strongly for reforms of farm programs until now, but presumably he would not want to campaign after being behind a farm bill veto.

Here’s an idea: instead of spreading the love around to more farmers (like the $1.6 billion in extra spending for fruit and vegetable growers who have traditionally missed out on largess), tinkering with the income limit and changing the method by which we give money to farmers, how about we scrap the whole thing altogether? See here and here for starters.